Quantifying the impact of methane emissions in Alberta upstream oil and gas – Part 5

How old are these assets?

Another theory is that emissions are related to the age of the asset.  Older wells would typically vent more methane, as they would not have been designed to deal with the problem.  The top graph represents the rolling three month emissions, and the blue line below represents the age of the wells.  If the blue line decreases, it indicates that new facilities have been brought on.  If it steadily increases, it means existing facilities have remained constant in time.

husky-age
The above Husky wells show that older wells maintain a constant amount of venting.  Husky spent little developing it’s conventional light oil assets, and as such they got older and continued to vent the same amount.  However, if you look at crude bitumen (heavy oil), there is a large spike of new wells in 2010 and 2012, with an initial spike of emissions that was then brought down.

bonterra-age

Bonterra has brought on a lot of new production in the last year, as you can see by the declining blue line (younger wells).  Yet emissions have remained consistent.  If companies like Crescent Point are able to eliminate emissions entirely, this suggests that others simply haven’t been considering this liability as they bring new production on.

Conclusion:

The upstream oil and gas industry has been getting better at dealing with the issue of vented methane emissions in the last decade.  Emissions decreases have outpaced the fall of production by a factor of three.  We’ve disproved emissions are in any way correlated to horizontal or directional wells, and we have shown that the majority of those emissions are produced by heavy oil facilities. We’ve shown that both Canadian Natural Resources and Devon energy have been able to mitigate emissions from the incremental heavy oil production they’ve brought on.  Some operators, such as Crescent Point stand out in having eliminated emissions altogether, showing that they’ve been able to manage the problem even before the regulatory burden occurs. Husky is evidence that older existing conventional production still contributes significantly, but that the problem has been addressed in new heavy oil production they’ve brought on.  Bonterra have brought on new conventional production and not dealt with the problem.  These types of operators will likely see that regulatory burden show up on their balance sheets.  Overall, the number of facilities contributing these emissions is relatively small (1.6%), but that those facilities may disproportionately lie within some operators.

To sum it up, the industry has largely been addressing the issue of vented methane recently, with some operators proactively retrofitting facilities and others bringing on facilities that don’t vent.  Of the large outstanding emitters, a relatively small number of facilities will be impacted by this regulatory burden.  There are perhaps 200 facilities (1.7%) across the province that will either be shut in due to economics, or be retrofitted to address methane emissions.  In other words, the province can address roughly 17.5% of it’s total methane emissions in addressing 1.7% of upstream oil facilities.

Back to Part 4